Holding the line on network costs

At the recent Burton Group Catalyst Conference, the network director for a major health care provider explained how he shaved millions off his budget by driving network costs down while improving performance.

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an organization cut network costs, while at the same time not just maintain, but actually improve network performance?

Trying to solve this dilemma can make even the most seasoned network manager feel a bit queasy. Sorell Slaymaker, the director of network and security architecture at the UnitedHealth Group Inc. (UHG), said he believes it can be done, and in fact shaved millions off his own budget.

"The goal of IT infrastructure is to be reliable, efficient and cost effective," Slaymaker told attendees at the 2005 Burton Group Catalyst Conference. "It is possible, but beware that cutting costs never makes you more popular."

Slaymaker proceeded to lay out several "guiding principals" that have helped him improve both the bottom line and network performance at UHG, a Minneapolis-based health care organization with approximately 42,000 employees spread across 150 sites and $41 billion in annual revenue.

Shop around

First, he said it is important to fully understand component costs, such as the price of your broadband connection or video and Web conferencing technologies, and then make sure those fees are reasonable by benchmarking those costs to industry averages.

"Once you understand what your component costs are," Slaymaker said, "go out there and compare." While comparison shopping may seem like a simple enough concept, it is especially important in the IT industry, Slaymaker said, where vendors like nothing more than serving as a customer's sole technology provider.

Instead, Slaymaker urged the attendees to become "vendor agnostic." Companies and organizations should remain open to different purchasing options and let business needs -- not vendor allegiance -- dictate IT spending.

Outsourcing

Touching on a somewhat controversial topic, Slaymaker said understanding which services to outsource and which services to keep in-house is another key to maximizing cost savings and improving network functionality.

Secondary business services, like installation and operations, are good candidates for outsourcing, he said.

However, he said, primary functions, such as network architecture and engineering, are better kept internal to maintain ultimate control of the network.

Cleaning up

Finally, Slaymaker pointed out that just because it might seem that a project is completed doesn't mean that it actually is.

"The project is never done," Slaymaker said, "until the cleanup is done."

By allowing unused circuits and hardware to languish once a project is seemingly completed, Slaymaker cautioned, companies often unknowingly squander valuable dollars that could be put to better use elsewhere.

So tying up loose ends by implementing a cleanup step at the conclusion of every project, Slaymaker said, is essential.

By following these guidelines, as well as others such as keeping a close eye on billing statements and maintaining open lines of communication with vendors and other customers, Slaymaker estimated that UHG shaved approximately $70 million a year off its annual networking budget of $180 million.

Attendee Geetha Tatati, a product manager for mobility- and location-based services at Sprint, said keeping costs in check while simultaneously improving performance is never far from her mind and she appreciated Slaymaker's insights.

"This presentation gave me a higher level of understanding of new places I can look for cost savings," Tatati said.

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